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Our favorite doomer went off again this week, focusing on how the high-end inventory has grown recently in the hot markets:

http://mhanson.com/8-9-hanson-house-supply-surging-time-highs-toxic-trend-change-suddenly-focus/

The graph above shows the inventory of Orange County homes listed for $1,300,000 or higher (San Diego wasn’t included but is similar to the OC).

Mark likes to believe that prices have to fall – his quote:

In other words, higher-end real estate prices have much more air underneath them than lower-end prices have air above them. The resulting house price compression will accelerate taking all price bands lower until the higher-end housing market can catch a macro bid.

Here is how inventory in our higher-end areas have changed since May 26, 2015:

Area
5/26/15 Actives
Today’s Actives
Diff
Del Mar & Solana Beach
73
99
+36%
Encinitas
91
110
+21%
La Jolla
185
218
+18%
RSF
237
275
+16%
Carmel Vly
116
126
+9%

Yep, our inventory in the tonier parts of town is higher but it has been so low lately that an extra 20-40 or so houses on the market in each area isn’t going to hurt much.  These are the only numbers I have for comparison, and May vs. August isn’t that great either – there is more build up of the unsuccessful sellers in every August.

Most importantly, the high-end sellers have more horsepower – they can hold out longer, and in most cases, will only sell if they get their price.

Rancho Santa Fe has been the harbinger of what we can expect elsewhere – lots of listings sitting around not selling, but few lowering their price – they are happy to wait.

Unless we get a surge of boomer liquidations, the worst thing that will happen is the whole high-end market will go stagnant.

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If you have concerns, just buy in Carmel Valley. In the first 7 months of 2015, there were 276 houses sold in the 92130, and this year there were 321 – a 16% increase!  And that doesn’t include the 100+ new CV homes sold this year.

Carmel Valley pricing statistics have been flat though. The average cost-per-sf only went up from $413/sf to $419/sf, and the median sales price actually went down from $1,178,000 to $1,124,000.  It’s probably a reason why they’ve had so many sales!

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